Thanks to the North American Free Trade Agreement, U.S. annual trade with our neighbors has increased by $800 billion since 1990. Our trade with the rest of the world rose by an even greater $2.3 trillion. These are big numbers that represent real wealth creation for Americans. During that period our economy has almost doubled in size and we have created more than thirty million net new jobs.
Building off NAFTA’s success, the United States-Mexico-Canada Agreement, or USMCA, improves access to the Canadian and Mexican markets for U.S. products, modernizes provisions for the digital age, and strengthens protection of intellectual property. These provisions play to the particular strengths of the United States.
Unfortunately, the Agreement also responds to concerns about globalism that threaten the economic benefits that American consumers and businesses enjoy as a result of low barriers to trade. In particular, its more restrictive requirements for regional content of imported cars will probably have unpredictable effects on the global competitiveness of the U.S. auto industry.
To preserve and extend the benefits of trade with our neighbors, and ensure the continued success of our globally competitive manufacturing sector, the George W. Bush Institute urges the U.S., Canadian, and Mexican governments to use the Competitiveness Committee created by USMCA to its fullest potential. We must not miss the opportunity to focus on regional cooperation as a tool for global competitiveness and sustained economic growth.
As the Competitiveness Committee begins its work, we recommend several policies that would further integrate the North American economy through market-driven infrastructure expansion, deliberate efforts to prioritize programs that enhance regional competitiveness, and consistent workforce development standards.
Reduce Red Tape
Chapter 26 of USMCA empowers the Competitiveness Committee to focus on developing modern infrastructure that improves the movement of trade. With this in mind, the committee should simplify the permitting, planning, financing, and execution of border-crossing projects.
Projects like roads, railroads, pipelines, and electric transmission lines are subjected to numerous reviews at local, state, and federal levels on both sides of the border. These include safety and security assessments, traffic and navigation studies, and environmental impact analyses. In addition, U.S. law requires that the president certify that a project would serve the U.S. national interest. From start to finish, approval of a permit can take years.
This complex of reviews raises the cost of moving goods and services across the region, making our products costlier and less competitive.
The presidential permit adds little to the array of other technical analyses and should be eliminated. At a minimum, the U.S. Congress should pass legislation directing the president to presume a proposed border crossing that meets all other criteria is in the national interest. The reform should define criteria under which the president may determine otherwise, within a set time frame.
Harness Market Forces to Improve Infrastructure
We also should work with Canada and Mexico to encourage private capital to invest in infrastructure along our shared borders, knowing that the marketplace will do a better job than the government of prioritizing proposed projects.
The administration should work with our neighbors to establish a North American Border Infrastructure Bank. North America is the only global trading bloc without an independent infrastructure bank to channel market priorities and ensure availability of finance.
Public and private funds should capitalize the bank and help manage the risk involved in infrastructure projects that straddle national jurisdictions. Empowering the bank to coordinate and finance transnational projects will also reduce burdens on national and local government budgets.
A Regional Approach to Workforce Development
The three nations need common standards for workforce development. Aligning standards will decrease the cost of recruiting. It will also boost productivity and strengthen the supply chains of companies operating in North America.
The Bush Institute has seen success with this tactic. We built a coalition of private- and public-sector partners in the United States, Canada, and Mexico. The coalition developed and implemented a basic curriculum for entry-level workers in manufacturing and logistics that is now available for use in all three countries.
This private-sector initiative costs almost no public resources, and we and our partners are currently analyzing the appropriate next layer of certification for deployment across North America. We invite the governments of North America to use this ongoing initiative to promote the development of workforce training and certification programs across North America.
A comprehensive focus on North American competitiveness through these initiatives will enhance the region's competitive position. In turn, this will lower costs for U.S. companies across the supply chain, make American goods more competitive on the global market,and secure American jobs. A long-term focus on essential infrastructure and workforce development investments in cooperation with Canada and Mexico will secure American’s prosperity and security in the future.
Matthew Rooney is the Managing Director of the George W. Bush Institute-SMU Economic Growth Initiative. The views expressed are the author's own.
